Digital Economy Board of Advisors Meeting Economy Board of Advisors Meeting Ryan Hagemann Technology and Civil Liberties Policy Analyst The Niskanen Center Submitted: December 9, 2016

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  • Public Interest Comment

    Comments submitted to the National Telecommunications and Information Administration in the Matter of:

    Digital Economy Board of Advisors Meeting

    Ryan Hagemann Technology and Civil Liberties Policy Analyst The Niskanen Center Submitted: December 9, 2016 Docket No. NHTSA-2016-28708

    Executive Summary

    These comments will address the issues of promoting trust online and innovation and emerging

    technologies. To that end, we offer a research paper from the Niskanen Center (Encryption, Trust,

    and the Online Economy: An Assessment of the Economic Benefits Associated with Encryption),

    submitted as a separate attachment, that focuses on the issue of online trust in great detail.

    Additionally, we cite numerous comment filings on a wide array of topicsfrom autonomous vehicles

    to content delivery networksin addressing the question of how regulators can most effectively

    promote emerging technologies without negatively impacting innovation.

    The Niskanen Center is a 501(c)3 libertarian issue advocacy organization that works to change public policy through direct engagement in the policymaking process.

    THE NISKANEN CENTER | 820 FIRST ST. NE, SUITE 675 | WASHINGTON, D.C. 20002 www.niskanencenter.org | For media inquiries, please contact ltavlas@niskanencenter.org

    http://www.niskanencenter.org/mailto:ltavlas@niskanencenter.org

  • Introduction

    As Larry Downes pointed out in a recent Washington Post op-ed, slow-moving regulators, even with the best of intentions, can do very little good trying to shape a digital revolution already in progress. 1

    As the Digital Economy Board of Advisors meet to recommend policies on preserving and extending

    the growth of the digital economy to the Secretary of Commerce, Mr. Downes words should be at the

    forefront of participants minds.

    While the Niskanen Center supports efforts at promoting a free and open Internet across the globe

    and ensuring digital access for workers, families, and companies, we will confine our comments to the

    two areas in which we have more extensive research and advocacy experience: promoting trust

    online and promoting innovation and emerging technologies.

    Promoting Trust Online

    One of the lowest-cost mechanisms that yields high returns on ensuring trust in the online ecosystem

    is the use of encryption, both end-to-end (E2E) and transit layer security (TLS). As we discuss in a 2015

    paper, encryption has served a valuable role in promoting online trust and its proliferation has

    contributed mightily to the growth of the digital economy: In 1994, total online business transactions

    were estimated at around $100 million. By 2000 the U.S. Department of Commerce predicted a

    3,000-fold increase in the ecommerce sector to $300 billion. As of 2014, total e-commerce retail

    sales had indeed amounted to well over $300 billion, annually. 2

    To put these numbers in perspective, total U.S. Gross Domestic Product was approximately $14.5

    trillion in 2012, of which the Internets contribution is estimated to have been $681 billionalmost 5

    percent of GDP. In our paper, we outline how trust has been improving in the online digital 3

    landscape, from banking to e-commerce. It is notable that the rise of mobile platforms for finance and

    e-commerce have seen the greatest increase in user trust, especially among younger cohorts. As

    smartphones become cheaper, more powerful, and home to a wider array of services and apps, this

    ecosystem will likely continue to see soaring user adoption rates; that is, assuming government actors

    abstain from imposing costly and ineffective barriers to the adoption of encryption.

    1 Larry Downes, How Should Donald Trumps Administration Regulate the Internet?, The Washington Post , November 30, 2016, https://www.washingtonpost.com/news/innovations/wp/2016/11/30/how-should-donald-trumps-administration-regulate-the-internet/?utm_term=.366b01f01450. 2 Ryan Hagemann and Josh Hampson, Encryption, Trust, and the Online Economy: An Assessment of the Economic Benefits Associated with Encryption, Niskanen Center, November 9, 2015, https://niskanencenter.org/wp-content/uploads/2015/11/RESEARCH-PAPER_EncryptionEconomicBenefits.pdf. 3 David Dean, Sebastian DiGrande et. al., The Internet Economy in the G-20, BCG Perspectives, March 19, 2012, https://www.bcgperspectives.com/content/articles/media_entertainment_strategic_planning_4_2_trillion_o pportunity_internet_economy_g20/. (The total contribution of the Internet to GDP was calculated as 4.7 percent of the given $14.5 trillion GDP numbers [(0.047)($14,500,000,000,000) = $681,500,000,000]).

    Niskanen Center | 1

    https://www.washingtonpost.com/news/innovations/wp/2016/11/30/how-should-donald-trumps-administration-regulate-the-internet/?utm_term=.366b01f01450https://www.washingtonpost.com/news/innovations/wp/2016/11/30/how-should-donald-trumps-administration-regulate-the-internet/?utm_term=.366b01f01450https://niskanencenter.org/wp-content/uploads/2015/11/RESEARCH-PAPER_EncryptionEconomicBenefits.pdfhttps://www.bcgperspectives.com/content/articles/media_entertainment_strategic_planning_4_2_trillion_ohttps://www.bcgperspectives.com/content/articles/media_entertainment_strategic_planning_4_2_trillion_o

  • Over the past two years, battles over whether to expand law enforcement access to E2E devices have

    been playing out in news headlines. Although law enforcement agencies have reasonable concerns 4

    surrounding the potential for various communications platforms going dark, regulations or

    legislation that would force companies to hold encryption keysor worse, the plain text 5

    conversations and communiques between individualswould have an injurious effect on peoples

    willingness to trust online service providers. In addition, the reality is that many encryption providers

    are foreign-based or open-source, severely limiting the ability of policymakers to simply legislate

    away the encryption debate. 6

    For all these reasons, the Niskanen Center has long supported the Digital Security Commission,

    proposed by House Homeland Security Chairman Michael McCaul and Sen. Mark Warner. This 7

    bipartisan legislation would establish a Congressionally-backed commission that would include all

    relevant stakeholdersfrom economists and cryptographers to law enforcement agencies and the

    intelligence communityand charge them with hammering out the details of what can be done to

    ensure the preservation of online security, while addressing the many real and considerable concerns

    faced by the law enforcement community.

    Encryption is unique in its ability to engender trust amongst online users. Its continued use and

    prevalence will be a necessary precondition for the continued growth of trust online. Weakening

    encryption, through legislation or regulatory fiat, will only result in loss of consumer faith in the online

    ecosystem, and would likely have disastrous consequences for the modern digital economy.

    Promoting Innovation and Emerging Technologies

    Given Alan Davidsons presentation at the May 2016 DEBA meeting, we will confine our comments 8

    on emerging technologies to those areas the board intends to focus their initial attention on: the

    Internet of Things (IoT), autonomous vehicles, and commercial unmanned aerial systems (UAS).

    4 See generally Ryan Hagemann, Missing the Forest for the Apple Tree, Niskanen Center, February 22, 2016, https://niskanencenter.org/blog/missing-the-forest-for-the-apple-tree/. 5 In particular, we are referencing the Compliance with Court Orders Act, co-sponsored by Sens. Dianne Feinstein and Richard Burr, which holds in part that a covered entity that receives a court order shall be responsible only for providing data in an intelligible format if such data has been made unintelligible by a feature, product, or service owned, controlled, created, or provided, by the covered entity or by a third party on behalf of the covered entity. Unfortunately, such a mandate holds the potential to do significant damage to the security and trust of online users. For more on our specific criticisms, see: Ryan Hagemann, Burr and Feinstein: To Hell With Encryption, Niskanen Center, April 8, 2016, https://niskanencenter.org/blog/burr-and-feinstein-to-hell-with-encryption/. 6 Bruce Schneier, Worldwide Encryption Products Survey, Schneier on Security Blog, February 11, 2016, https://www.schneier.com/blog/archives/2016/02/worldwide_encry.html. (The findings of this survey identified 619 entities that sell encryption products. Of those 412, or two-thirds, are outside the U.S.-calling into question the efficacy of any US mandates forcing backdoors for law-enforcement access.) 7 See generally McCaul-Warner Commission on Digital Security, House Homeland Security Committee, https://homeland.house.gov/mccaul-warner-commission-2/. 8 Alan Davidson, Commerce Department Digital Economy Agenda 2016, May 2016, Presentation, https://www.ntia.doc.gov/files/ntia/publications/alan_davidson_digital_economy_agenda_deba_presensation_051616.pdf.

    Niskanen Center | 2

    https://niskanencenter.org/blog/missing-the-forest-for-the-apple-tree/https://niskanencenter.org/blog/burr-and-feinstein-to-hell-with-encryption/https://www.schneier.com/blog/archives/2016/02/worldwide_encry.htmlhttps://homeland.house.gov/mccaul-warner-commission-2/https://www.ntia.doc.gov/files/ntia/publications/alan_davidson_digital_economy_agenda_deba_presensation_051616.pdfhttps://www.ntia.doc.gov/files/ntia/publications/alan_davidson_digital_economy_agenda_deba_presensation_